Thomson Kernaghan & Co. Ltd. and Research Capital Corp. have signed a letter of intent to merge their businesses to create one of Canada’s largest independent full-service investment dealers.

“Our goal is the creation of the pre-eminent investment bank focused on the tremendous opportunities offered by the under-served corporate mid- market,” said Patrick Walsh, president and CEO of Research Capital, and Lee Simpson, president and CEO of Thomson Kernaghan. “Our retail and institutional clients strongly endorse the formation of a major, non-bank owned investment dealer to identify tomorrow’s leading growth companies.”

The new entity, which will operate under the Research Capital name, will combine complementary private client, investment banking, research, and institutional sales and trading organizations, but will not include TK’s NASDAQ trading operation.

Research Capital will possess the financial strength to continue making the investments in technology and regulatory compliance now required by investors and regulatory agencies.

The new Research Capital will emerge with approximately 180 retail advisors and well over $3 billion in client assets making it the highest quality independent retail force in the country. Completion of the transaction is subject to normal commercial terms and the receipt of regulatory approvals.

“We are joining forces because of the opportunity to build a strong, independent operation with broader human capabilities able to serve a demanding private client base in today’s more complex investment world. Our goal is to create an organization with depth in its product offerings and client service that will attract the best investment advisors to a culture founded on the highest standards of ethics, integrity and regulatory compliance. Because of the complementary nature of our two organizations, we do not expect significant rationalization.”